Austrian OGH on Regional Planning Contracts

Jan 17, 2025 Benn-Ibler Rechtsanwälte

Compliance with regional planning contracts, in particular the right of proposal and consent, can be safeguarded, the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has clarified.

In the case at hand, the plaintiff property developer had purchased a plot of land located in the municipal area of the defendant in the year 2019. At the time the sale was concluded, the property was classified as open land, but was to be treated as building land after the sale. Crucial to the purchase was a declaration by the defendant’s mayor that the land would be rezoned as building land once a housing need was identified and considered by the council.

After concluding a contract in which the applicant undertook to build a subsidised complex and to sell all the residential units at subsidised prices, the municipality re-zoned the land. The massive multi-storey residential building subsequently constructed by the plaintiff was only approved in the residential area because the residential complex consisted of subsidised housing units. Had the plaintiff been able to sell the residential units and underground parking spaces on the open market, the plaintiff would have achieved higher sales prices.

Consequently, the plaintiff sought the nullification of the entire regional development contract on the grounds of alleged illegality and immorality, the cancellation of the pre-emptive rights incorporated in favour of the defendant municipality as well as a declaration that the defendant was liable to pay damages for all financial losses suffered as a result of the plaintiff being restricted in the disposal of the residential units on the property.

The claim was dismissed by both the court of first instance and the court of appeal. The OGH confirmed both these decisions.

The contract of use concluded between the parties falls under Section 33(2) and (3) of the Tyrolean Regional Planning Act (Tiroler Raumordnungsgesetz, TROG). There were no grounds that would have rendered the contract inadmissible from the outset. Even if individual provisions of the contract had been inadmissible, this would not lead to the invalidity of the contract as a whole. The plaintiff did not claim partial invalidity.

Ultimately, the plaintiff’s claim was unsuccessful.

OGH 1 Ob 57/24z (19 November 2024)